Europe’s booming labour market needs to brace for change

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Europe أخبار

Growth,GDP,Inflation

The luxury of labour hoarding is coming to an end in the eurozone as corporate profits dwindle.

And that’s going to mean wage growth will ease, unemployment will tick up and we’ll see more bankruptcies too. A terrible prediction? We’re actually just getting back to normality. The eurozone economy has been struggling since late 2022, but its labour market has continually been overheating. It's been something of a conundrum that the unemployment rate is at historic lows of 6.4%, given the economy's hardly grown for two years.

Employment in the sector is now about 7% larger than before the pandemic, while private employment is just 3% above the level of the fourth quarter of 2019. This adds to the labour shortages experienced in the private sector, and given that the public sector, on average, works fewer hours and has lower productivity, it seems to have contributed to the breaks in trend mentioned before through a compositional effect.

 

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